Which one of the following statements is NOT true?
A. The classical model assumes that pure competition exists.
B. The classical model assumes that no single seller of a commodity can affect its price.
C. The classical model assumes that people suffer from money illusion.
D. The classical model assumes that people are motivated by self-interest.
Answer: C
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The one characteristic that is not associated with a pure public good is
a. consumption of the good by one person doesn't prevent its consumption by others b. the market produces less than the socially optimal quantity c. no one can be excluded from consuming the good d. the good can only be produced by the government e. that even if one consumes more of it, there is still the same amount for others to consume
The behavior of the monopolistic firm
A. maximizes the benefits to consumers, given the resources available to the economy. B. increases output in order to raise prices in the short term. C. results in excess capacity and inefficiency. D. results in entry into the market by other firms.
If the government allowed a free market for transplant organs such as kidneys to exist, critics argue that such a market would
a. not reduce the shortage of organs. b. benefit rich people but not poor people. c. be inefficient because markets are not good at allocating scarce resources. d. be inferior to a plan imposed by a benevolent dictator.
If the price of a complement for tires decreases, all else equal,
A. demand for tires will decrease. B. demand for tires will increase. C. quantity demanded for tires will decrease. D. quantity supplied for tires will decrease. E. supply for tires will increase.